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India Food & Drink Report Q1 2008
Description:
The India Food Drink Report provides independent forecasts and competitive intelligence on Indias food and drink industry.
India’s fledgling food processing industry continues to fascinate as investors, both local and multinational, begin ramping up their commitment to the sector in preparation for what is expected to be explosive growth. However, as the author examines in its newly-published Q108 India Food & Drink Report, such investment is still only targeting a minority of India’s immense population, and the effects of economic growth remain unfelt by the country’s vast rural majority.
The author believes that four key features of, or events within, the new report ably sum up this trend. Local dairy major and ice cream specialist Amul Dairy has announced plans to enter India’s US$500mn snack food market, via the addition of a savoury snack product to its predominantly dairy portfolio. Meanwhile, Italian confectionery company Ferrero SpA has unveiled plans to invest US$35mn in the construction of a mint manufacturing plant in Maharashtra state, a plant that will later look to target the growing premium chocolate confectionery sector. Both investments are astute. Amul plans to leverage its existing distribution strengths to gain a foothold in what is an increasingly competitive sector, while Ferrero wants to target a market whose small size bellies its potential. To 2012, the author is forecasting growth of 22% in value terms in India’s confectionery market, a forecast that could well be dramatically increased should more multinationals come forward in search of opportunities.
Both manufacturers, alongside the more obvious names of PepsiCo’s Frito-Lay and Britannia, are looking to secure a slice of India’s US$69bn processed food industry, an industry growing so quickly that the country’s Ministry of Food Processing and Industry announced in October 2007 that it could now boast a fairly dynamic export sector - between 2003 and 2007 the value of India’s processed food exports grew by around 194% to US$13.9bn, according to ministry figures. However, while this is certainly an industry sub-sector worth getting excited about - as these latest investments show - it is also worth considering the risks associated with investing in such an industry.
To 2012, the author is forecasting food consumption in dollar terms to increase by just 9.4% in India, a very modest rate when one considers the pace of the country’s economic expansion. In per capita terms this growth is even more telling, with food consumption expected to rise by just 4.3% to reach US$150.50 in 2012. These forecasts highlight the downside to India’s otherwise immense potential. India’s vast rural majority are yet to feel the benefits of economic growth and thus do not participate in consumer goods industries such as processed foods, snack foods and confectionery. This explains why India secures only a mid-table position in our new Food & Drink Business Environment Ratings - the country’s size being nowhere near reflected in the size of its consumer audience. Ultimately India’s sheer size means this downside will not affect its capacity to attract investment, but the amount of capital manufacturers will be willing to invest without the promise of immediate and plentiful rewards remains to be seen.
India’s fledgling food processing industry continues to fascinate as investors, both local and multinational, begin ramping up their commitment to the sector in preparation for what is expected to be explosive growth. However, as the author examines in its newly-published Q108 India Food & Drink Report, such investment is still only targeting a minority of India’s immense population, and the effects of economic growth remain unfelt by the country’s vast rural majority.
The author believes that four key features of, or events within, the new report ably sum up this trend. Local dairy major and ice cream specialist Amul Dairy has announced plans to enter India’s US$500mn snack food market, via the addition of a savoury snack product to its predominantly dairy portfolio. Meanwhile, Italian confectionery company Ferrero SpA has unveiled plans to invest US$35mn in the construction of a mint manufacturing plant in Maharashtra state, a plant that will later look to target the growing premium chocolate confectionery sector. Both investments are astute. Amul plans to leverage its existing distribution strengths to gain a foothold in what is an increasingly competitive sector, while Ferrero wants to target a market whose small size bellies its potential. To 2012, the author is forecasting growth of 22% in value terms in India’s confectionery market, a forecast that could well be dramatically increased should more multinationals come forward in search of opportunities.
Both manufacturers, alongside the more obvious names of PepsiCo’s Frito-Lay and Britannia, are looking to secure a slice of India’s US$69bn processed food industry, an industry growing so quickly that the country’s Ministry of Food Processing and Industry announced in October 2007 that it could now boast a fairly dynamic export sector - between 2003 and 2007 the value of India’s processed food exports grew by around 194% to US$13.9bn, according to ministry figures. However, while this is certainly an industry sub-sector worth getting excited about - as these latest investments show - it is also worth considering the risks associated with investing in such an industry.
To 2012, the author is forecasting food consumption in dollar terms to increase by just 9.4% in India, a very modest rate when one considers the pace of the country’s economic expansion. In per capita terms this growth is even more telling, with food consumption expected to rise by just 4.3% to reach US$150.50 in 2012. These forecasts highlight the downside to India’s otherwise immense potential. India’s vast rural majority are yet to feel the benefits of economic growth and thus do not participate in consumer goods industries such as processed foods, snack foods and confectionery. This explains why India secures only a mid-table position in our new Food & Drink Business Environment Ratings - the country’s size being nowhere near reflected in the size of its consumer audience. Ultimately India’s sheer size means this downside will not affect its capacity to attract investment, but the amount of capital manufacturers will be willing to invest without the promise of immediate and plentiful rewards remains to be seen.
Contents:
Executive Summary 5
Business Environment 6
Regional Food & Drink Business Environment Ratings 6
Table: Asia Pacific Food & Drink Business Environment Ratings - Q108 8
India’s Food & Drink Business Environment Rating 8
SWOT Analysis 10
Mass Grocery Retail 10
India Mass Grocery Retail Industry SWOT 10
Food and Drink 11
India Food & Drink Industry SWOT 11
Macroeconomic Outlook 12
Table: India - Economic Activity 14
Retail15
Regional Overview: Declining Role Of Independent Retail In Asia Pacific 15
Table: MGR Versus Independent/Traditional Retailers In Selected Asia Pacific Markets, 2006 (store numbers) 16
Table: MGR versus Independent/Traditional Retailers In Selected Asia Pacific Markets, 2006 (sales, US$mn) 18
Industry Forecast Scenario 19
Table: India MGR Sales by Format (US$bn) - Historical Data & Forecasts 20
Table: Grocery Retail Sales By Format - Historical Data And Forecasts (%) 21
Industry Developments 21
Market Overview 24
Table: Structure Of India’s Mass Grocery Retail Market By Estimated Number of Outlets 25
Table: Structure Of India’s Mass Grocery Retail Market, Sales By Format (US$mn) 25
Table: Average Outlet Sales By Format, 2006 (US$mn) 26
Table: Sales/Store Number Breakdown By Retail Format Type, 2006 26
Food And Drink 27
Regional Overview: Confectionery in the Asia Pacific region 27
Table: Leading Global Chocolate Manufacturers 27
Table: Leading Confectionery Companies in the Asia Pacific Region 30
Industry Forecast Scenario 32
Food 32
Table: Food Consumption Indicators - Historical Data & Forecasts 33
Drink 34
Table: India Beverage Sub-Sectors - Value/Volume Sales Historical & Forecasts 36
Industry Developments 36
Food 36
Drink 39
Market Overview 41
Agriculture 41
Table: India Agricultural Sub-Sector Production (‘000 tonnes) - Historical Data 42
Table: India Agricultural Sub-Sector Output by Value (US$mn) 43
Table: India Organic Agricultural Data 43
Table: India Dairy Industry Data, 2006 43
Food 43
Drink 44
Tobacco45
Industry Forecast Scenario 45
Table: Cigarette Value/Volume Sales - Historical Data & Forecasts 46
Industry Developments 46
Market Overview 47
Competitive Landscape48
Key Players 48
Mass Grocery Retail 48
Table: Key Players in India’s Mass Grocery Retail Sector - 2006 48
Food and Drink 49
Table: Key Players in India’s Food & Drink Sector - 2006 49
Asia Pacific Regional Company Case Studies 50
Food: Unilever In The Asia Pacific Region 50
Table: Food Consumption in Selected Asia Pacific Markets (US$) 53
Drink: San Miguel Corporation In The Asia Pacific Region 54
Table: San Miguel Corporation In The Asia Pacific Region 55
Table: San Miguel Corporation Revenue And Earnings Growth By Operating Division, Q107 (%) 55
Table: San Miguel Corporation - Sales By Market (US$mn) 57
Table: San Miguel Corporation - Key Historical Data 58
Mass Grocery Retail: Metro In The Asia Pacific Region 59
Table: Metro Group - Five-Year Financial Results 59
Company Analysis 63
Mass Grocery Retail 63
Pantaloon Retail India 63
RPG Retail 64
Food 65
Hindustan Unilever Limited (HUL) 65
Drink 66
United Breweries Limited (UBL) 66
Coca-Cola India 67
Food & Drink Ratings Appendix 68
Introduction: Revised Methodology 68
Ratings Overview 68
Ratings System 68
Indicators 68
Limits of Potential Returns 69
Risks to Realisation of Potential Returns 70
Weighting 70
Weighting 71
Our Forecast Modelling 72
How We Generate Our Industry Forecasts 72
Retail Industry 72
Sources 73
Business Environment 6
Regional Food & Drink Business Environment Ratings 6
Table: Asia Pacific Food & Drink Business Environment Ratings - Q108 8
India’s Food & Drink Business Environment Rating 8
SWOT Analysis 10
Mass Grocery Retail 10
India Mass Grocery Retail Industry SWOT 10
Food and Drink 11
India Food & Drink Industry SWOT 11
Macroeconomic Outlook 12
Table: India - Economic Activity 14
Retail15
Regional Overview: Declining Role Of Independent Retail In Asia Pacific 15
Table: MGR Versus Independent/Traditional Retailers In Selected Asia Pacific Markets, 2006 (store numbers) 16
Table: MGR versus Independent/Traditional Retailers In Selected Asia Pacific Markets, 2006 (sales, US$mn) 18
Industry Forecast Scenario 19
Table: India MGR Sales by Format (US$bn) - Historical Data & Forecasts 20
Table: Grocery Retail Sales By Format - Historical Data And Forecasts (%) 21
Industry Developments 21
Market Overview 24
Table: Structure Of India’s Mass Grocery Retail Market By Estimated Number of Outlets 25
Table: Structure Of India’s Mass Grocery Retail Market, Sales By Format (US$mn) 25
Table: Average Outlet Sales By Format, 2006 (US$mn) 26
Table: Sales/Store Number Breakdown By Retail Format Type, 2006 26
Food And Drink 27
Regional Overview: Confectionery in the Asia Pacific region 27
Table: Leading Global Chocolate Manufacturers 27
Table: Leading Confectionery Companies in the Asia Pacific Region 30
Industry Forecast Scenario 32
Food 32
Table: Food Consumption Indicators - Historical Data & Forecasts 33
Drink 34
Table: India Beverage Sub-Sectors - Value/Volume Sales Historical & Forecasts 36
Industry Developments 36
Food 36
Drink 39
Market Overview 41
Agriculture 41
Table: India Agricultural Sub-Sector Production (‘000 tonnes) - Historical Data 42
Table: India Agricultural Sub-Sector Output by Value (US$mn) 43
Table: India Organic Agricultural Data 43
Table: India Dairy Industry Data, 2006 43
Food 43
Drink 44
Tobacco45
Industry Forecast Scenario 45
Table: Cigarette Value/Volume Sales - Historical Data & Forecasts 46
Industry Developments 46
Market Overview 47
Competitive Landscape48
Key Players 48
Mass Grocery Retail 48
Table: Key Players in India’s Mass Grocery Retail Sector - 2006 48
Food and Drink 49
Table: Key Players in India’s Food & Drink Sector - 2006 49
Asia Pacific Regional Company Case Studies 50
Food: Unilever In The Asia Pacific Region 50
Table: Food Consumption in Selected Asia Pacific Markets (US$) 53
Drink: San Miguel Corporation In The Asia Pacific Region 54
Table: San Miguel Corporation In The Asia Pacific Region 55
Table: San Miguel Corporation Revenue And Earnings Growth By Operating Division, Q107 (%) 55
Table: San Miguel Corporation - Sales By Market (US$mn) 57
Table: San Miguel Corporation - Key Historical Data 58
Mass Grocery Retail: Metro In The Asia Pacific Region 59
Table: Metro Group - Five-Year Financial Results 59
Company Analysis 63
Mass Grocery Retail 63
Pantaloon Retail India 63
RPG Retail 64
Food 65
Hindustan Unilever Limited (HUL) 65
Drink 66
United Breweries Limited (UBL) 66
Coca-Cola India 67
Food & Drink Ratings Appendix 68
Introduction: Revised Methodology 68
Ratings Overview 68
Ratings System 68
Indicators 68
Limits of Potential Returns 69
Risks to Realisation of Potential Returns 70
Weighting 70
Weighting 71
Our Forecast Modelling 72
How We Generate Our Industry Forecasts 72
Retail Industry 72
Sources 73
Companies Mentioned
- Coca-Cola India
- Hindustan Unilever Limited (HUL)
- Pantaloon Retail India.
- RPG Retail
- United Breweries Limited (UBL)
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